Leading Global 2000 companies and IT outsourcers incorporate IBM Tivoli® License Compliance
Manager for z/OS® as an essential part of their software asset management practice. They do so
because IBM Tivoli License Compliance Manager for z/OS identifies installed software products and
their actual usage in the mainframe environment. It can help users recognize the need for
cancelling unused, under used, or redundant software which can result in cost savings.

IBM Tivoli License Compliance Manager for z/OS can:

Help you eliminate unused, under used, outdated, and duplicate-function software

Gather information on how software is used and help in your efforts to negotiate cost-effective
contracts

Help you demonstrate your utilization of software products

Be used to help you achieve financially optimal capacity upgrades and server consolidations

The IBM ISPF Productivity Tool turns IBM's Interactive System Productivity Facility (ISPF) into a
centralized, object-oriented development center that can dramatically improve the performance of
ISPF. IBM ISPF Productivity Tool is a TSO/ISPF enhancement product that:

Can help increase the productivity of ISPF users by packing various ISPF functions into the areas in
which programmers most frequently work such as browse, edit member lists, and dataset lists

Enhances several ISPF functions while adding some of its own

In environments where programmers have responsibility for multiple projects and assignments coupled
with tight deadlines, IBM ISPF Productivity Tool can be an essential tool. And, because IBM ISPF
Productivity Tool is fully integrated into the standard ISPF functions, it typically requires little
training.

IBM Tivoli License Compliance Manager for z/OS and IBM ISPF Productivity Tool have been added to the
Tivoli portfolio as a result of the recent purchase of Isogon Corporation by IBM. These products
are now offered in accordance with IBM terms, pricing, and fulfillment practices. Customers on
maintenance for Isogon's SoftAudit for z/OS and SPIFFY will be offered the opportunity to migrate
their entitlements to the IBM offerings being announced.

IBM Tivoli License Compliance Manager for z/OS provides software inventory and actual product usage
that can provide a manager of software assets with critical information that can help him achieve
success in negotiating software license agreements. The program's information can help users
recognize the need for the cancellation of unused or redundant software which can result in cost
savings.

IBM Tivoli License Compliance Manager for z/OS information is designed to help users achieve
financially optimal configurations, capacities, and software deployment. IBM Tivoli License
Compliance Manager for z/OS can also assist users in their planning of cost effective server or data
consolidation planning.

IBM ISPF Productivity Tool integrates with Interactive System Productivity Facility (ISPF). Once
IBM ISPF Productivity Tool is installed, programmers have easy access to functionality that would
normally require more time-consuming navigation. With the IBM ISPF Productivity Tool, powerful new
and existing functions become available inside the standard member lists, dataset lists, browse,
view, and edit functions. Additionally, IBM ISPF Productivity Tool functions can be invoked from
virtually any ISPF screen, which can aid productivity.

IBM ISPF Productivity Tool works with all supported versions of ISPF. IBM ISPF Productivity Tool is
well-suited for environments where programmers perform maintenance on multiple projects or in cases
where programmers are assigned to unfamiliar projects. IBM ISPF Productivity Tool provides easy
ways to organize project files into related lists with the added ability to enter project-related
annotations. IBM ISPF Productivity Tool also provides extremely efficient and powerful interactive
search and replace functionality that works across libraries and library members. As with other IBM
ISPF Productivity Tool functions, they are fully integrated into the standard ISPF dataset and
member lists. IBM ISPF Productivity Tool provides interfaces to common ISPF add-on file utilities,
making it easier to access different file types from the same ISPF/IBM ISPF Productivity Tool
enhanced interface.

Migration information

Over time, you will be contacted by IBM to migrate your use entitlements from the current portfolio
to the replacement product. The following table provides a mapping. You must be current on
maintenance to be eligible for migrations. If you are not current, you will have to pay a
get-current fee.

The migration is for the same capacity as currently licensed when converted to the pricing metric
announced for the replacement offering (for example, MIPS or other metric > MSUs/Value Units).
Initial migration quotes will be generated using standard MIPS -> MSU or similar ratios, though
customers will be migrated to ensure that they are entitled to use the software on the same systems
that they are currently managing by adjusting the MSU quantities where required.

Value Unit-based pricing

Value Unit pricing for eligible zSeries® IPLA programs enables a lower cost of incremental growth
and enterprise aggregation. Each zSeries IPLA product with Value Unit pricing has a single price
per Value Unit and a conversion matrix, called Value Unit Exhibit, for converting from some
designated measurement to Value Units. Most commonly Millions of Service Units (MSUs) is the
measurement designated by IBM to be converted to Value Units. Some other measurements are engines
or messages. Since MSUs are the most common measurement, that measurement will be used for the
remainder of this description.

Value Unit pricing offers price benefits for customers. For each zSeries IPLA program with Value
Unit pricing, the quantity of that program needed to satisfy applicable IBM terms and conditions is
referred to as the "required license capacity". Each of the various Value Unit Exhibits stipulate
that the larger your required license capacity, the fewer Value Units per MSU you will need. Value
Unit Exhibits are uniquely identified by a three digit code and referred to using the nomenclature
VUExxx, where xxx is the three digit code.

Subsequent acquisitions of Value Unit priced programs offer additional price benefits for customers.
The quantity of each zSeries IPLA program that you have acquired is referred to as "entitled license
capacity". If you wish to grow your entitled license capacity for a zSeries IPLA program, the
calculation to determine additional needed Value Units is based upon the number of Value Units
already acquired.

For each zSeries IPLA program with Value Unit pricing, you should:

Determine the required license capacity, in MSUs

Aggregate the MSUs across the enterprise

Convert the total MSUs to Value Units, using the applicable Value Unit Exhibit, and

Multiply the price per Value Unit by the total number of Value Units to determine the total cost.

To simplify conversion from the designated measurement to Value Units or vice-versa, use the Value
Unit Converter Tool. For additional information or to obtain a copy of the Value Unit Converter
Tool, visit the Value Unit Converter Tool Web site

Note that Value Units of a given product cannot be exchanged,
interchanged, or aggregated with Value Units of another product.

To determine the required license capacity for the zSeries IPLA program
you selected, refer to the
Terms and conditions
section.

IPLA and Subscription and Support considerations

IPLA licenses can be transferred from one machine to another within, but not limited to an
enterprise. The customer may aggregate the capacity for all the processors the product is operated
on to achieve a more economic price. This will result in a single Proof of Entitlement. It is the
customer's responsibility to manage the distribution of Value Units within the limits of the
entitlement of the product license.

Subscription and Support must cover the same capacity as the product license entitlement.
Subscription and Support will be available in the country in which the agreement is made.

For information on a related product the result of IBM's acquisition of Isogon corporation refer to
Software Announcement
205-187
, dated August 9, 2005.

Business Partner information

If you are a Direct Reseller - System Reseller acquiring products from IBM, you may link directly to
Business Partner information for this announcement. A PartnerWorld ID and password are required
(use IBM ID).

Training is available or will be available for IBM Tivoli® products. Education is offered through
IBM Global Services  IT Education Services and through IBM Tivoli Software Authorized Training
Providers.

The Publications Center is a worldwide central repository for IBM product
publications and marketing material with a catalog of 70,000 items.
Extensive search facilities are provided. Payment options for orders are
via credit card (in the U.S.) or customer number for 50 countries. A
large number of publications are available online in various file
formats, and they can all be downloaded by all countries free of charge.

The IBM Publications Notification System (PNS) enables subscribers to set
up profiles of interest by order number/product number. PNS subscribers
automatically receive e-mail notifications of all new publications
defined in their profiles. These may then be ordered/downloaded from the
Publications Center

Limitations:
IBM Tivoli License Compliance Manager for z/OS and IBM ISPF Productivity Tool products are
available only in U.S. English.

Planning information

Direct customer support:
Direct customer support is provided by IBM Operational Support Services  SoftwareXcel. This
fee service enhances customers' productivity by providing voice and electronic access into the IBM
support organization. IBM Operational Support Services  SoftwareXcel will help answer questions
pertaining to usage and suspected software defects for eligible products.

Installation and technical support is provided by Global Services. For more information, call
800-IBM-4YOU (426-4968).

For technical support or assistance, contact your IBM representative, or visit

Security, auditability, and control

IBM Tivoli License Compliance Manager for z/OS and IBM ISPF Productivity Tool use the security and
auditability features of the operating system software. The customer is responsible for evaluation,
selection, and implementation of security features, administrative procedures, and appropriate
controls in application systems and communication facilities.

IBM Tivoli software products are priced using IBM Tivoli's Enhanced Value-Based Pricing. The
Enhanced Value-Based Pricing system is based upon the IBM Tivoli Environment-Managed Licensing
Model, which uses a managed-environment approach  whereby price is determined by what is managed
rather than the number and type of product components installed.

Unlike typical systems management licensing models that require entitlements of specific software
components to specific systems, the IBM Tivoli Environment-Managed Licensing Model provides the
customer flexibility to deploy its IBM Tivoli software products within its environment in a manner
that can address and respond to the customer's evolving architecture. That is, as the architecture
of a customer's environment changes, the customer's implementation of IBM Tivoli software can be
altered, as needed, without affecting the customer's license requirements (as long as the customer
does not exceed its entitlements to the software).

Under Enhanced Value-Based Pricing, licensing and pricing of server-oriented applications are
determined based upon the server's use in the customer's environment. Typically, such applications
are licensed and priced in a manner that corresponds to each installed and activated processor of
the server managed by the IBM Tivoli application to help correlate price to value while offering a
simple solution.

Where a server is physically partitioned, this approach is modified. This partitioning technique is
the approach used with systems that have either multiple cards or multiple frames, each of which can
be configured independently. For servers capable of physical partitioning (for example, IBM
pSeries® Scalable POWERparallel Systems® servers, Sun Ultra servers, and HP Superdome servers),
an entitlement is required for each processor in the physical partition being managed by the Tivoli
application. For example, assume that a server has 24 processors installed in aggregate. If this
server is not partitioned, entitlements are required for all 24 processors. If, however, it is
physically partitioned into three partitions each containing eight processors, and Tivoli products
were managing only one of the three partitions, then entitlements would be required for the eight
processors on the physical partition managed by the IBM Tivoli application.

For servers with virtual or logical partitions, entitlements are required for all installed and
activated processors on the server. For each IBM Tivoli application managing a clustered
environment, licensing is based on the cumulative number of installed and activated processors on
each server in the cluster. Where the cluster includes physically partitioned servers, the
considerations described above concerning physically partitioned servers apply as well.

Enhanced Value-Based Pricing recognizes the convergence of RISC/UNIX® and Microsoft Windows/Intel
technologies, in order to simplify the customers licensing requirements, and to provide a smoother,
more scalable model. Pricing and licensing does not differentiate between non-zSeries® server
platforms or operating systems. For some products, this platform neutrality extends to zSeries and
other host servers as well.

IBM Tivoli Enhanced Value-Based Pricing Terminology definitions

Client device or client

A client device is a computer system that requests the execution of a set of commands, procedures,
or applications from another computer system that is typically referred to as a server. Multiple
client devices may share access to a common server. A client device generally has some processing
capability or is programmable to allow a user to do work. Examples include, but are not limited to,
notebook computers, desktop computers, desk side computers, technical workstations, appliances,
personal digital assistants, automated teller machines, point-of-sale terminals, tills and cash
registers, and kiosks.

Millions of Service Units (MSU)

An MSU is defined as millions of Central Processing Unit (CPU) service units per hour; the measure
of capacity used to describe the computing power of the hardware processors on which S/390® or
zSeries software runs. Processor MSU values are determined by the hardware vendor, IBM, or Software
Compatible Vendors (SCVs).

Network nodes include routers, switches, hubs, and bridges that contain a
network management agent. A single network node may contain any number
of interfaces or ports.

Partitions

A server's resources (CPU, memory, I/O, interconnects, and buses) may be
divided according to the needs of the applications running on the server.
This partitioning can be implemented with physical boundaries (Physical
Partitions) or logical boundaries (Logical Partitions).

Physical Partitions are defined by a collection of processors dedicated
to a workload and can be used with systems that have either multiple
cards or multiple frames, each of which can be configured independently.
In this method, the partitions are divided along hardware boundaries and
processors, and the I/O boards, memory, and interconnects are not shared.

Logical Partitions are defined by software rather than hardware and
allocate a pool of processing resources to a collection of workloads.
These partitions, while separated by software boundaries, share hardware
components and run in one or more physical partitions.

Port

A port is the physical connection between a device and the network.

Processor

A processor is a functional unit in a computer that interprets and
executes instructions. A processor consists of at least an instruction
control unit and an arithmetic and logic unit.

Server

A server is a computer system that executes requested procedures,
commands, or applications to one or more clients and/or other devices
over a network. Examples include, but are not limited to, file servers,
print servers, mail servers, database servers, application servers, and
Web servers.

Standby or backup systems

For programs running or resident on backup machines, IBM defines three
types of situations: cold, warm, and hot. In the cold and warm
situations, a separate entitlement for the copy on the backup machine is
normally not required and typically no additional charge applies. In a
hot backup situation, the customer needs to acquire another license or
entitlements sufficient for that server. All programs running in backup
mode must be solely under the customer's control, even if running at
another enterprise's location.

As a practice, the following are definitions and allowable actions
concerning the copy of the program used for backup purposes.

Cold 
A copy of the program may reside, for backup purposes, on a machine as
long as the program is not started. There is no additional charge for
this copy.

Warm 
A copy of the program may reside for backup purposes on a machine and
is started, but is idling, and is not doing any work of any kind. There
is no additional charge for this copy.

Hot 
A copy of the program may reside for backup purposes on a machine, is
started, and is doing work. The customer must acquire a license or
entitlements for this copy and there will generally be an additional
charge.

Doing work includes, for example, production, development, program
maintenance, and testing. It also could include other activities such as
mirroring of transactions, updating of files, synchronization of
programs, data, or other resources (for example, active linking with
another machine, program, database, or other resource, and so on), or any
activity or configurations that would allow an active hot switch or other
synchronized switch over between programs, databases, or other resources
to occur.

In the case of a program or system configuration that is designed to
support a high availability environment by using various techniques (for
example, duplexing, mirroring of files or transactions, maintaining a
"heartbeat", active linking with another machine, program, database, or
other resource, and so on), the program is considered to be doing work in
the hot situation and a license or entitlement must be purchased.

Value Units

A Value Unit is a metric used to compute license quantities, is program
specific, and is typically only used on products managing zSeries
systems.

Product Web site

A complete list of products and licensing documents is available at Web
site

Value Units for IBM 9672 processors are based upon the full capacity of these systems. This is
applicable to all zSeries systems measured on MSU capacity. Information on MSU capacities can be
found in the "IBM System/370, System/390® and zSeries Machine Exhibit", Z125-3901.

For each zSeries IPLA program with Value Unit pricing, the quantity of that program needed to
satisfy applicable IBM terms and conditions is referred to as the 'required license capacity'. Your
required license capacity is based upon the following factors:

The zSeries IPLA program you select

The applicable Value Unit Exhibit

The applicable terms

Single version charging:
To elect single version charging, the customer must notify and identify to IBM the prior
program and replacement program and the machine the programs are operating on.

New licensees

Orders for new licenses will be accepted now.

Shipment will begin on the planned availability date.

Basic license

Ordering information for 5698-A80 and 5698-A81 MSU-based zSeries offerings:
To order, specify the program product number and the appropriate license or charge option.
Also, specify the desired distribution medium. To suppress shipment of media, select the
license-only option in CFSW.

To receive voice technical support, via telephone, during normal business hours and future releases
and versions at no additional charge, Subscription and Support must be ordered. The capacity of
Subscription and Support (for example, Value Units or number of processors) must be the same as the
capacity ordered for the product licenses.

To order, specify the Subscription and Support program product number and the appropriate license or
charge option.

IBM is also providing Subscription and Support for these products via a separately purchased
offering under the terms of the IBM International Agreement for Acquisition of Support (IAAS). This
offering:

Includes and extends the support services provided in the base support to include technical support
via telephone during normal business hours.

Entitles customers to future releases and versions at no additional charge. Note that the customer
is not entitled to new products.

When Subscription and Support is ordered, the charges will renew automatically annually unless
cancelled by the customer.

Licensing:
IBM International Program License Agreement. Proofs of Entitlement (PoE) are required for all
authorized use.

These products are licensed under the IBM Program License Agreement (IPLA), and the associated
Agreement for Acquisition of Support, which provides for support with ongoing access to releases and
versions of the program. These programs have a one-time license charge for use of the program and
an annual renewable charge for the enhanced support that includes telephone assistance (voice
support for defects during normal business hours) as well as access to updates, releases, and
versions of the program as long as support is in effect. S/390 and zSeries IBM Operational Support
Services  SoftwareXcel is an option for those customers who desire added services.

Limited warranty applies:
Yes

Warranty:
This program has warranty for a minimum of one year from acquisition from IBM or authorized IBM
Business Partner. The warranty provided to the customer, for at least one year from acquisition, is
access to databases (read Web sites) for program information and FAQs, including any known fixes to
defects, which the customer can download or obtain otherwise and install at leisure.

Program support:
Enhanced support, called Subscription and Support, includes telephone assistance (voice support
for defects during normal business hours) as well as access to updates, releases, and versions of
the program as long as support is in effect. The customer will be notified of discontinuance of
support with 12 months' notice.

Money-back guarantee:
If for any reason you are dissatisfied with the program and you are the original licensee,
return it within 30 days from the invoice date, to the party (either IBM or its reseller) from whom
you acquired it, for a refund. For clarification, note that for Programs acquired under any of
IBM's On/Off Capacity on Demand (On/Off CoD) software offerings, this term does not apply since
these offerings apply to programs already acquired and in use by the customer.

Copy and use on home/portable computer:
No

Volume orders (IVO):
No

Passport Advantage® applies:
No

Software Maintenance applies:
No

For operating system software, the revised IBM Operational Support Services  SoftwareXcel
offering will provide support for those operating systems and associated products that are not
available with the newly announced Software Maintenance offering. This will ensure total support
coverage for your enterprise needs, including IBM and selected non-IBM products. For complete lists
of products supported under both the current and revised SoftwareXcel offering, visit

Sub-capacity terms and conditions

For each zSeries IPLA program with Value Unit pricing, the quantity of that program needed to
satisfy applicable IBM terms and conditions is referred to as the "required license capacity". Your
required license capacity is based upon the following factors:

The zSeries IPLA program you select

The applicable Value Unit Exhibit

The applicable Terms

Whether your current mainframes are full-capacity or sub-capacity

For more information on the Value Unit Exhibit for the zSeries IPLA program you selected, refer to
the
Ordering information
section.

In cases where full-capacity is applicable, the following terms apply:

Full machine-based:
The required license capacity of a zSeries IPLA program with full machine-based terms equals the
MSU-rated capacity of the machines where the zSeries IPLA program executes.

For more information on mainframe MSU-rated capacities, refer to "The System/370, System/390, and
zSeries Machine Exhibit (Z125-3901)" or visit the "Mainframes" section of the zSeries Exhibits Web
site

Execution-based:
The required capacity of a zSeries IPLA sub-capacity program with these
terms equals the capacity of the LPARs where the zSeries IPLA program
executes.

z/OS-based:
The required license capacity of a zSeries IPLA program with these
terms equals the license capacity of z/OS (and z/OS.e) on the machines
where the zSeries IPLA program executes.

Reference-based:
The required license capacity of a zSeries IPLA program with these
terms equals the license capacity of the applicable monthly license
charge (MLC) program. This MLC program is called the "parent" program.

For more information on mainframe MSU-rated capacities, refer to "The
System/370, System/390, and zSeries Machine Exhibit (Z125-3901)" or visit
the "Mainframes" section of the zSeries Exhibits Web site

For more information on sub-capacity zSeries IPLA terms and conditions,
refer to Software Announcement
204-184
, dated August 10, 2004.

Additional Information for Products with Reference-Based Terms zSeries
IPLA sub-capacity programs with reference-based terms adds value to the
parent program across the environment, regardless of where in
environment, the zSeries IPLA program executes.

An environment is defined as either a single/stand-alone machine or a
qualified Parallel Sysplex®. Customers may have one or more different
environments across their enterprise. To determine the required license
capacity for each zSeries IPLA program with referenced-based terms, each
environment should be assessed separately.

When a zSeries IPLA sub-capacity program with reference-based terms is
used in a qualified Parallel Sysplex environment the required license
capacity of the zSeries IPLA program must equal with the license capacity
of the parent program across the Parallel Sysplex. Qualified Parallel
Sysplex refers to one

Sub-capacity eligibility:
To be eligible for sub-capacity charging on select zSeries IPLA
programs, you must first implement and comply with all terms of either
sub-capacity Workload License Charges (WLC) or sub-capacity Entry
Workload License Charges (EWLC). To implement sub-capacity WLC or EWLC,
a machine must be zSeries (or equivalent). On that machine:

All instances of the OS/390® operating system must be migrated to the
z/OS (or z/OS.e) operating systems

Any licenses for the OS/390 operating system must be discontinued

All instances of the z/OS operating (or z/OS.e) systems must be running
in z/Architecture (64-bit) mode

For that machine, you must create and submit a Sub-Capacity Report to IBM
each month. Sub-Capacity Reports must be generated using the
Sub-Capacity Reporting Tool (SCRT). For additional information or to
obtain a copy of SCRT, visit the zSeries Software Pricing Web site

You must comply with all of the terms of the WLC or EWLC offering,
whichever is applicable:

The complete terms and conditions of sub-capacity WLC are defined in the
IBM Customer Agreement  Attachment for zSeries Workload License
Charges (Z125-6516).

The complete terms and conditions for sub-capacity EWLC are defined in
the IBM Customer Agreement  Attachment for z800 and z890 Software
License Charges (Z125-6587).

Additionally, you must sign and comply with the terms and conditions
specified in the amendment to the IPLA contract  "Amendment for
zSeries Platform Programs Sub-Capacity Pricing (Z125-6929-02 or higher)".
Once the amendment is signed, the terms in the amendment replace any and
all previous zSeries IPLA sub-capacity terms and conditions.

Sub-capacity utilization determination

Sub-capacity utilization is determined based on the utilization of an eligible operating system and
machine (for example, z/OS running in z/Architecture (64 bit) mode on a zSeries (or equivalent)
server).

On/Off Capacity on Demand

To be eligible for On/Off Capacity on Demand pricing, customers must be enabled for temporary
capacity on the corresponding hardware, and the required contract  Z125-6611, Attachment for
Customer Initiated Upgrade and IBM On/Off Capacity on Demand  Software  must be signed prior to use.

The Americas Call Centers, our national direct marketing organization, can add your name to the
mailing list for catalogs of IBM products.

Note:
Shipments will begin after the planned availability date.

Trademarks

System/370, iSeries, and z/Architecture are trademarks of International Business Machines
Corporation in the United States or other countries or both.

Tivoli, z/OS, SP2, pSeries, Scalable POWERparallel Systems, zSeries, S/390, eServer, System/390,
SystemPac, Passport Advantage, Parallel Sysplex, the e-business logo, and OS/390 are registered
trademarks of International Business Machines Corporation in the United States or other countries or
both.

Intel and Pentium are trademarks of Intel Corporation.

Windows and Microsoft are trademarks of Microsoft Corporation.

UNIX is a registered trademark of the Open Company in the United States and other countries.

Other company, product, and service names may be trademarks or service marks of others.